Process: 304/2016-T

Date: January 31, 2017

Tax Type: Selo

Source: Original CAAD Decision

Summary

CAAD Decision 304/2016-T addresses procedural requirements in tax arbitration concerning Stamp Duty assessments. The claimant challenged 2015 Stamp Duty assessments under Verba 28.1 TGIS for urban properties, alleging no individual unit had a taxable property value (VPT) equal to or exceeding €1,000,000. However, a critical discrepancy emerged: the petition identified property registered under one article number in a specific Lisbon parish, while the submitted assessment documents related to a different property article in another parish. The Tax Authority raised a dilatory exception, arguing the petition was inadequate under Article 10(2)(d) RJAT, which requires proper identification of challenged tax acts and supporting proof. The tribunal invited the claimant to correct this inaccuracy pursuant to Article 16(c) RJAT, but the claimant failed to respond to multiple invitations. The Tax Authority then requested dismissal under Article 278(3) of the Civil Procedure Code, applicable subsidiarily through Article 29 RJAT. The tribunal found that the contradiction between alleged facts and submitted documents equated to failing to submit evidence of the challenged tax acts altogether, constituting a fundamental procedural defect that could warrant case dismissal when left uncorrected despite judicial invitation.

Full Decision

ARBITRAL DECISION

1. REPORT

1.1. A...., Lda., taxpayer no...., with address at Street ..., no.... – ..., Lisbon, hereinafter referred to as the Claimant, submitted on 02/06/2016 a request for arbitral judgment, in which it requests in particular that there be "declared the nullity of the tax acts which constitute its object, relating to the assessment of Stamp Duty" for the year 2015.

1.2. The Honorable President of the Ethics Committee of the Center for Administrative Arbitration (CAAD) appointed on 20/07/2016 as arbitrator, Francisco Nicolau Domingos.

1.3. On 31/08/2016 the arbitral tribunal was constituted.

1.4. In compliance with the provisions of article 17, no. 1 of Decree-Law no. 10/2011, of 20 January (RJAT), the Respondent was notified on 31/08/2016 to, if it so wished, submit a response and request the production of additional evidence.

1.5. On 03/10/2016 the Respondent submitted a petition, in which it submits that: "1 - In the initial petition submitted by the claimant, the assessment of stamp duty - item 28, relating to the year 2015 and the urban property registered in the matrix under article …, of the parish of …, in Lisbon, is challenged. ... - However, the documents submitted relate to the urban property registered in the matrix under article …, of the parish of …, in Lisbon. ... - Given the evident contradiction between the claim and the documents that are submitted, such inaccuracy should be corrected and a new time period fixed for the submission of the response...".

1.6. The tribunal, after examining the case file and in light of the content of the aforementioned petition, invited on 04/10/2016 the Claimant to correct such inaccuracy, extending the time period for the submission of the response by the Respondent, all under article 16, subsection c) of the RJAT.

1.7. The Claimant did not respond to such invitation.

1.8. The Respondent, in light of the omissive procedural conduct of the Claimant, argued on 20/10/2016 that because of such fact it should be absolved of the claim, in light of article 278, no. 3 of the Civil Procedure Code (CPC), applicable subsidiarily by virtue of article 29 of the RJAT.

1.9. The tribunal on 22/11/2016 invited the Claimant to pronounce itself regarding the dilatory exception invoked by the Respondent.

1.10. The Claimant also said nothing regarding the invitation.

1.11. The tribunal on 20/12/2016 understood that the dilatory exception could be dealt with in the arbitral decision, dispensed with the holding of the meeting to which article 18, no. 1 of the RJAT refers, on the grounds of the principle of autonomy of the arbitral tribunal in the conduct of the proceedings and in the determination of the rules to be observed with a view to obtaining, within a reasonable time period, a judgment on the merits regarding the claims formulated, cf. article 16, subsection c) of the RJAT, and also determined that the parties, if they so wished, submit written pleadings and scheduled 31/01/2017 for the pronouncement of the arbitral decision.

2. POSITIONS OF THE PARTIES

The Claimant contends as to the facts that the assessments of Stamp Duty - item 28.1 of the General Table of Stamp Duty (TGIS) refer to "... the urban property located in the parish of ... in Lisbon, with the registration article ... ..." and relate to the year 2015.

On the merits, it alleges, in summary, that the assessments which are the subject of the case file suffer from error regarding the factual and legal assumptions, given that none of the units of the property had on 31 December 2015 a taxable property value (VPT) equal to or greater than € 1,000,000.00, a fact which, in its view, is sufficient for the case in question not to meet the rule of application - item 28.1 of the TGIS.

It further concludes by requesting the payment of compensatory interest and compensation for the provision of undue guarantee.

For its part, the Respondent understands that, in light of the contradiction existing between the property identified in the request for arbitral judgment, the documents submitted by the Claimant and the omissive procedural conduct regarding the tribunal's invitation to remedy such discrepancy, it should be absolved of the claim, in light of article 278, no. 3 of the CPC, applicable subsidiarily by virtue of article 29, no. 1, subsection e) of the RJAT.

In this way the tribunal must decide:

a) Whether the dilatory exception invoked by the Respondent should be upheld;

b) Whether the assessments are illegal for suffering from error regarding the factual and legal assumptions;

c) Whether the Claimant is entitled to compensatory interest;

d) Whether the Claimant is entitled to compensation for the provision of undue guarantee.

3. PRELIMINARY ISSUE

The Respondent came to the case file requesting absolution of the claim in light of the contradiction existing between the property identified in the request for arbitral judgment, the documents submitted by the Claimant in such petition and the omissive procedural conduct regarding the tribunal's invitation to remedy such discrepancy.

First and foremost, it is important to establish the elements necessary to assess the preliminary issue, as follows:

i) The Claimant submitted a request for arbitral judgment in which it identifies that the Stamp Duty assessments which are the subject of the case file relate to the building registered in the matrix under article … of the parish of …, Lisbon.

ii) It submitted to the case file Stamp Duty assessments for the year 2015 relating to the building registered in the matrix under no. … of the parish of …, Lisbon, which are as follows:

a) 1st Unit D - € 1,691.40;
b) 1st Unit E - € 1,692.50;
c) 1st Unit F - € 1,827.30;
d) 2nd Unit D - € 1,747.30;
e) 2nd Unit E - € 1,706.20;
f) 2nd Unit F - € 1,878.10;
g) 3rd Unit D - € 1,747.30;
h) 3rd Unit E - € 1,706.20;
i) 3rd Unit F - € 1,878.10;
j) 4th Unit D – € 1,747.30;
k) 4th Unit E - € 1,706.20;
l) 4th Unit F - € 1,878.10;
m) 5th Unit D - € 1,747.30;
n) 5th Unit E - € 1,706.20;
o) 5th Unit F - € 1,878.10;
p) 6th Unit D - € 1,747.30;
q) 6th Unit E - € 1,706.20;
r) 6th Unit F - € 1,878.10;
s) 7th Unit D - € 1,747.30;
t) 7th Unit E - € 1,706.20;
u) 7th Unit F - € 1,878.10;
v) 8th Unit D - € 1,747.30;
w) 8th Unit E - € 1,706.20;
x) 8th Unit F - € 1,878.10;
y) 9th Unit D - € 1,747.30;
z) 9th Unit E - € 1,706.20;
aa) 9th Unit F - € 1,878.10.

iii) The Claimant was notified by order dated 04/10/2016 to, if it so wished, correct the inaccuracy between the facts alleged and the documents submitted with the request for arbitral judgment.

iv) The Claimant said nothing within the time period fixed in such judicial order.

Article 10, no. 2 of the RJAT provides that: "The request for constitution of an arbitral tribunal is made by means of a petition sent by electronic means to the President of the Center for Administrative Arbitration which must include: (...) b) The identification of the tax act or acts which are the subject of the request for arbitral judgment; (...) d) The elements of proof of the facts indicated and the indication of the means of proof to be produced;...".

The lack of synchronization between the facts alleged in the request for arbitral judgment and the elements intended to prove them falls under the breach of the aforementioned article 10, no. 2, subsection d) of the RJAT.

Thus, referring in the petition to tax acts that apply to the "...urban property located in the parish of ... in Lisbon, with the registration article... ..." and submitting to the case file assessments relating to various units of the registration entry no. ... of the parish of ... is equivalent to the failure to submit the documents evidencing the alleged tax acts.

For this reason, the tribunal understood that in light of such irregularity an invitation to correct was necessary. In this respect, doctrine holds regarding the repealed article 88 (now article 87) of the Code of Administrative Court Procedure (CPTA) that: "In all other cases, in which official correction is not possible, no. 2 provides that the judge issue an order of clarification, which may have two purposes: (a) to provide for the remedy of dilatory exceptions; (b) to permit the correction of formal irregularities in the petition, 'specifically for the lack of legal requirements or the failure to present an essential document (emphasis ours) or on which the law conditions the continuation of the case'"[1]. Or, put another way, the tribunal understood that one of the modalities in which it is possible to invite the correction of the deficient initial petition was verified: "...b) when the action cannot proceed because the petition is not accompanied by certain documents..." - ANTUNES VARELA/J. MIGUEL BEZERRA/SAMPAIO E NORA, Manual de Processo Civil, 2nd edition, Coimbra Editora, 1985, page 262.

However, the Claimant did not respond to the invitation formulated by the tribunal, a circumstance which implies the conclusion that there has been a violation of the provisions of article 10, no. 2, subsections b) and d) of the RJAT. That is, the absence of elements of proof of the tax acts relating to the assessments connected with the "...urban property located in the parish of ... in Lisbon, with the registration article... ..." which the Claimant contends existed and which therefore do not permit the identification of the aforementioned acts.

The documents in which the tax acts are embodied carry essential factuality to the assessments in question, as evidenced for example by the amount, their legal basis, the identification of the property which is the subject of such tax acts, and the rate applied.

Moreover, the allegation by the Claimant, in its request for arbitral judgment, of facts constituting the cause of action by reference to the assessments merely demonstrates that they are included in its petition. In this context, jurisprudence[2] holds that: "Thus, the Claimant not having submitted the documents, following the notifications duly made, no other conclusion could be drawn other than the lack, pure and simple, of the cause of action".

Thus, the absence of core documentary proof, due to the failure to submit elements that would permit the recognition of the tax acts that are alleged, more specifically, the registration entry on which they apply, constitutes an absence of factual material necessary for the assessment of the law, creating the ineptitude of the petition submitted.

In summary, the Respondent not having submitted such documents, the conclusion cannot be other than the recognition of the dilatory exception provided for in article 98, no. 1, subsection a) and no. 2 of the Code of Tax Procedure and Process (CPPT), applicable by virtue of the provisions of article 29, no. 1, subsection a) of the RJAT, for lack of cause of action and from which results the nullity of all the proceedings.

4. DECISION

In these terms and with the grounds described above, it is decided to judge the dilatory exception of ineptitude of the initial petition as verified, and thus to absolve the Respondent of the claim.

5. VALUE OF THE CASE

The value of the case is fixed at € 47,864.00, in accordance with article 97-A of the CPPT, applicable by virtue of the provisions of article 29, no. 1, subsection a) of the RJAT and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).

6. COSTS

Costs to be borne entirely by the Claimant, in the amount of € 2,142, cf. article 22, no. 4 of the RJAT and Table I attached to the RCPAT.

Notify.

Lisbon, 31 January 2017

The Arbitrator,

(Francisco Nicolau Domingos)

[1] MÁRIO AROSO DE ALMEIDA/CARLOS ALBERTO FERNANDES CADILHA, Commentary on the Code of Administrative Court Procedure, 3rd revised edition, Almedina, 2010, page 584.

[2] Decision of the Court of Appeal of Coimbra rendered in the context of case no. 235291/09.0YIPRT.C1, of 22/03/2011, reported by Justice FRANCISCO CAETANO.

Frequently Asked Questions

Automatically Created

What is a dilatory exception (exceção dilatória) in Portuguese tax arbitration proceedings?
A dilatory exception (exceção dilatória) in Portuguese tax arbitration is a procedural defense mechanism that challenges the formal validity of proceedings without addressing the substantive merits of the claim. In CAAD arbitration, the Tax Authority can invoke a dilatory exception when the petition fails to meet mandatory requirements under Article 10(2) RJAT, such as proper identification of challenged tax acts or adequate supporting documentation. This procedural objection must be resolved before the tribunal can examine the merits of the tax dispute.
Can a CAAD arbitral tribunal dismiss a case due to inadequacy (ineptidão) of the initial petition?
Yes, a CAAD arbitral tribunal can dismiss a case due to inadequacy (ineptidão) of the initial petition under Article 278(3) of the Civil Procedure Code, applicable subsidiarily through Article 29(1)(e) RJAT. When the petition fails to comply with Article 10(2) RJAT requirements—such as properly identifying tax acts or submitting corresponding proof—the tribunal must first invite the claimant to correct the deficiency. If the taxpayer fails to respond to this judicial invitation within the established timeframe, the tribunal may dismiss the claim, absolving the Tax Authority from responding to the merits.
What happens when the taxpayer fails to correct errors in a tax arbitration petition after being invited by the tribunal?
When a taxpayer fails to correct errors in a tax arbitration petition after being invited by the tribunal under Article 16(c) RJAT, the procedural consequence is potential dismissal of the entire case. The tribunal's invitation to remedy deficiencies is a procedural safeguard, but the taxpayer's omissive conduct—failing to respond within the fixed deadline—triggers Article 278(3) CPC. This provision allows the tribunal to absolve the Tax Authority of the claim without examining the substantive tax issues, as the fundamental procedural requirements for a valid arbitration request remain unfulfilled despite the opportunity to correct them.
How does Stamp Tax (Imposto do Selo) Verba 28.1 apply to urban properties in Portugal?
Stamp Tax (Imposto do Selo) Verba 28.1 of the General Table (TGIS) applies to urban properties with a taxable property value (VPT - valor patrimonial tributável) equal to or exceeding €1,000,000 as of December 31 of the relevant tax year. The tax is assessed annually on qualifying properties, regardless of ownership transfers. Each autonomous property unit is evaluated individually—if a building contains multiple registered units, Verba 28.1 applies only to those specific units meeting the €1,000,000 threshold, not to the aggregate building value. Taxpayers can challenge these assessments by demonstrating that individual units fall below the statutory VPT threshold.
What are the procedural consequences of contradictions between the petition and supporting documents in CAAD arbitration?
Contradictions between the arbitration petition and supporting documents in CAAD proceedings constitute violations of Article 10(2)(b) and (d) RJAT, which require proper identification of challenged tax acts and submission of corresponding proof elements. When the petition identifies one property but submitted assessments refer to a different property, this discrepancy effectively means the challenged tax acts lack evidentiary support. The tribunal must invite correction under Article 16(c) RJAT. If the taxpayer remains silent despite this invitation, the Tax Authority can successfully invoke a dilatory exception, leading to case dismissal under Article 278(3) CPC without any examination of substantive tax law arguments or merits.